In the United States, day traders often earn between $10,000 to $35,000 per year, but some are paid between $50,000 and $100,000 per year. And, in a world where hedge funds and private-equity funds make fortunes, some day traders may be lucky enough to make $300,000 or more per year. But if you are a seasoned trader who has worked in the industry for many years, things could get even more rewarding. As Fortune pointed out in 2014, the average day trader in America makes $1.25 million in a single year, compared with $1 million to $3 million for hedge-fund managers.
3. You can make money while doing research.
The Wall Street Journal recently reported that there are more than 500,000 hedge funds in existence. Many of them earn their money from investing. And there are many, many more who sell the same type of investments or other assets, making a fraction of what hedge funds do.
4. It’s easy to build a profitable niche by keeping a good eye on markets.
Research can provide invaluable insights about the economy and society. Some hedge funds have been able to create a niche for themselves, in which they specialize in buying or selling a specific sector of stocks or other financial instruments. Their goal is to create low-cost investment products that will help investors earn profits and make a profit while also managing their money responsibly.
5. Hedge funds usually have a better understanding of what’s good and what’s not.
While a day trader may have a good grasp on the market — or even “understand a key ticker function,” as one commentator put it — a hedge fund manager or a big trader may see a particular stock for just a few minutes and then see no future return. Hedge funds know what’s good and what’s not and are therefore more sophisticated at gauging risk.
6. Hedge funds’ research is so precise that they almost never “miss.”
A hedge fund manager said in 2012 that their best research “doesn’t look that much different from the rest of the market. It’s one or two trades on a specific strategy or strategy-related trade.”
And of course, these days it’s almost routine to read about a stock going up 5%. Or about a technology company’s stock rising 10% or even 20% just because an investor saw news reports about it — which is how you know that hedge funds have the best insight
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